QUESTIONS TO ASK BEFORE MAKING AN OFFER ON A SHORT SALE

April 17, 2011 at 8:05 pm 1 comment

by: Maria Hass

1. How many loans does the seller have? Usually two loans will take longer and harder to negotiate. It is also two times the work compared to just one loan. If there are three loans, do not bother to make an offer.

2. Who is/are the seller’s banks? Some banks are quicker to process the short sales than others. Bank of America, EMC, SunTrust Mortgage, HSBC Bank are among my favorites. Beware of PNC as the 2nd lienholder. This bank is illogical and ask for an outrageous amount to settle.

3. Is there a PMI? Private Mortgage Insurance (PMI) are insurance for the lenders. Some are nicer than others. They could make or break the deal.

4. Who will negotiate the short sale? – In some cases the listing Realtor hires a third party negotiator such as a law firm, another Realtor or mortgage broker to negotiate the file. This arrangement leaves no room for the listing agent to have control over the file and many times is not aware of what is going on with the negotiations with the seller’s lender. The third party negotiator is in many cases overwhelmed with the number of short sales at their desk and is not directly accountable to the seller who they have not met. Short sale is a game of strategy, the negotiator could strategize the short sale to approval. And it is hard to strategize a transaction if the negotiator does not have ownership of the file. I do not encourage making an offer on a short sale that is negotiated by a third party. I view this as a “red flag” and a waste of time.

5. Is there a foreclosure date scheduled? It is always best to start the short sale process when the sellers missed their first payment or is thinking of missing payments. However, if there is one, two things could happen 1- The bank will work quickly to avoid foreclosure or 2- If the foreclosure has been extended many times, the seller’s lender may choose not to grant another sale date extension. Which means, the Realtor can spend countless hours toward getting an approval only to find out that the seller’s lender will no longer extend the foreclosure date and your approval letter means “nothing”.

6. Where are you in the short sale process? The answer to this question will give you an idea as to the time frame of completing the short sale. Usually short sales are from 3 months to a year depending on the circumstances of the buyer, seller, price value of the home. If all these factors are in place, the short sale could close within three months. However, if the buyer cancels or the bank disapproves the offer or the bank counters with terms that the parties cannot agree on, then it will delay the closing considerably.

Entry filed under: Arizona Real Estate, Chandler Real Estate, Foreclosures & Short Sales, Phoenix Real Estate, Real Estate Deals. Tags: , , .

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